One of the first issues your new firm will likely confront is the pay period: should you pay your staff weekly or biweekly? Twice a week? Monthly?
Of course, you’ll want to consider both the demands of your employees and the demands of your HR payroll administrators. In other words, what is the simplest system for your HR team to implement, and what will make the majority of your employees the happiest?
Biweekly pay is an excellent option to consider, and it’s also the most common option in the United States. According to the Bureau of Labor Statistics, 36.5 percent of private enterprises have chosen biweekly pay as their preferred payment system per year. Let’s see how to calculate the biweekly pay period in 2021.
Biweekly pay
In the United States, biweekly is the most typical option for a company’s pay cycle. Biweekly pay indicates that you pay your employees on the same day every two weeks, for a total of 26 paychecks each year. Due to the fact that payday happens every two weeks, some months will have three paychecks. If the majority of your staff are hourly, biweekly payments can be beneficial. Furthermore, your staff will be pleased to get paid more frequently (as opposed to monthly or semimonthly).
If you’re wondering which pay period choice is best for your firm to implement in 2021 – or if you’re simply interested in what biweekly pay comprises – keep reading.
What is Biweekly Pay?
Biweekly pay means that you pay your employees every two weeks on a predetermined day. For example, suppose you decide to pay your employees every two weeks on Friday.
Take a look at the calendar below for the months of January and February of 2019:
As you can see, it doesn’t matter which day of the month you pay your employees; you can pay them on the 4th of one month and then 1st the next. It is only necessary to pay once every two weeks.
Once the year begins, you will pay your staff every two weeks. This may appear simple, but it means you’ll have three pay periods instead of two for two months out of the year.
Read Also: Best online payday loans: Top 10 companies in 2021
Benefits of Biweekly pay
Here are some of the benefits of biweekly pay:
#1. More pay periods:
With biweekly pay, you get two more paychecks per year than with semimonthly pay. Receiving three paychecks in one month can be a nice perk, especially if you work as an hourly employee.
#2. More consistency
Paydays occur every other week on the same day, making this pay cycle very consistent. As opposed to being paid on different days of the week, you know exactly when to expect a paycheck.
#3. Better Budgeting
When you can expect a relatively consistent paycheck every other week, you may be able to plan your expenses more effectively.
A small disadvantage to biweekly pay is the ability to accurately calculate your take-home pay. When you get paid semimonthly, your paycheck is evenly divided twice, making it easy to figure out deductions like taxes and benefits. Since you receive two extra paychecks per year on a biweekly period, there are two months when you need to complete some extra calculations to discover your take-home pay. However, you can use Internet resources to help you complete any additional calculations for your paycheck.
Ultimately, it’s vital you evaluate what your competitors are doing, and what makes the most sense for your staff when choosing a pay period. Your decision may be influenced by the size of your HR team, the availability of a payroll provider with reasonable payroll fees, and whether your employees are salaried or hourly.
How many Biweekly Pay Periods will there be in 2023?
In 2023, there will be 26 biweekly pay periods. This is because biweekly pay means once every two weeks, to calculate it simply divide the number of weeks in the year 2023 — 52 — by two.
How to Calculate Biweekly Pay
#1. Determine your annual gross salary.
#2. Divide that figure by 26.
That is the amount you will receive biweekly.
To calculate your hourly pay, divide your biweekly paycheck by the number of hours worked every two weeks.
For example, a $60,000 gross yearly pay equates to $2,307.69 biweekly or $28.84 per hour for a 40-hour workweek.
If you have money deducted from your paycheck for benefits such as health insurance or 401(k), you may need to factor them into your biweekly pay calculations.
Biweekly Pay vs. Semimonthly Pay
There is a significant difference between biweekly and semimonthly pay. Whereas biweekly pay is paid every other week, semimonthly pay is paid twice a month. Companies pay employees on two particular days of the month for semimonthly pay. A corporation, for example, may pay its employees on the 15th and 30th of each month. Semimonthly pay produces 24 paychecks as opposed to 26 for biweekly pay. Paychecks are slightly greater to compensate for the fact that there are fewer of them during the year.
If you make $30,000 per year, here’s how semimonthly and biweekly pre-tax paydays compare:
- Semimonthly: $30,000 divided by 24 equals $1,250 per payday.
- Biweekly: $30,000 divided by 26 equals $1,153.85 per payday.
With semimonthly paydays, you will be paid more per paycheck, but there will be fewer paychecks. With biweekly paydays, you get less money per paycheck but get more paydays. You may use the same logic if you’re paid hourly, as long as you account for any overtime hours you work throughout a pay cycle.
How firms decide on pay cycles
Pay cycles are ultimately chosen by businesses based on what works best for them. Businesses may choose to pay employees weekly or monthly in addition to biweekly and semimonthly pay cycles. For weekly pay, you receive your paycheck on the same day each week, such as Friday. You’d receive 52 fewer paychecks per year. Employers typically give monthly payments on the first of each month, implying that you would receive 12 larger paychecks a year.
Employers must consider several considerations when deciding on a pay cycle, including:
#1. Payroll processing software
Some payroll software vendors charge businesses each time a pay cycle is processed. If a corporation employs this software, it may be more inclined to pay employees semimonthly because processing two fewer paychecks each year saves the organization money. Although it is less frequent, an employer may distribute paychecks once a month.
#2. The Budget
Employers must carefully budget their expenses, including payroll, in order to turn a profit. They may be more likely to use biweekly pay to help budget because it is more constant than semimonthly pay.
#3. Employee contentment
Another crucial factor that businesses take into account is how employees feel about the pay cycle. Some employees may prefer biweekly or even weekly pay since it allows them to budget more easily around a more constant pay cycle. Employers may find it valuable to measure how employees feel about various pay cycles in order to implement the optimum one.
Various pay periods may also be more common in different businesses. Manufacturing, construction, and hospitality businesses, for example, may pay their employees weekly because their employees’ hours are more irregular than in other industries. Paying them weekly can make budgeting easier than other pay periods. Because it is a continuous cycle for both companies and employees, biweekly pay is most prevalent in many industries.
Advantages Of Biweekly Pay
#1. Aids Overtime calculation
One of the advantages of biweekly payments is that it helps employers to effectively calculate the payment for staff that worked overtime/ extra time
#2. Extra Payment
This advantage is more favorable to the employee and not the employer. It pays for 26 weeks per year rather than the regular 12 times for monthly payments.
#3. Fixed Payment Intervals
Employees are assured they are getting their money on a particular day of the week.
#4. Helps in family budgeting
Knowing their paycheck is available on a fived day, employees are free to plan their budget ahead of time.
What Industries Make Use of Biweekly Pay?
Biweekly pay is the most common pay frequency, with 36.5 percent of U.S. businesses paying their employees every two weeks. According to the Department of Labor (DOL), biweekly pay is most common in three industries:
- Education and healthcare
- Recreation and Hospitality
Detailed information
Check your state payday requirements from the DOL before making any decisions on how frequently to pay your employees, as some states demand more regular pay intervals.
Is biweekly pay better or worse?
Employee paychecks will be higher for semimonthly frequency than for biweekly frequencies because the payroll is processed less frequently. Employees will receive two additional paychecks to make up for the reduced compensation from the biweekly schedule. Let’s assume that an employee earns $42,000.00 annually.
Is it better to get paid biweekly or twice a month?
In order to provide hourly workers with a more reliable payment, biweekly pay may be preferable to bimonthly pay for salaried personnel. Payroll service outsourcing can also improve productivity and save time.
Can biweekly pay impact an employee’s credit score or financial standing?
It’s unlikely that biweekly pay by itself will have a noticeable effect on a worker’s credit rating or financial situation. The employee may accrue debt or fail to make payments, which could have a detrimental effect on their credit score, if they are unable to manage their finances and budget their biweekly salary.
What impact does changing work hours have on biweekly pay?
A worker’s biweekly compensation may fluctuate if they modify their work schedule because they will be paid differently each pay period. It is crucial to evaluate and modify the employee’s pay rate to account for the shifts in their working hours.
How do bonuses and commissions affect biweekly pay?
Whether they are paid as a separate sum or are added to the employee’s base pay, bonuses and commissions might affect their biweekly salary. Any bonuses or commissions received by the employee will be shown in their biweekly pay and may have an effect on their overall earnings for that pay period.
How does biweekly pay impact budgeting and financial planning?
An employee’s budgeting and financial planning may be impacted by receiving biweekly pay because they will receive 26 instead of 12 paychecks annually. Due to this, some pay periods may see greater payouts while others may see smaller paychecks.
Can an employee receive a raise or salary increase with biweekly pay?
Yes, a worker who is paid biweekly can get a raise or wage rise. Their entire earnings per pay period will be impacted by the increase, which will be shown in their biweekly pay.
How can an employee track their biweekly pay and earnings history?
By looking over their pay stubs, interacting with their employer, or getting access to their earnings data through an online payroll system, an employee can keep track of their biweekly pay and earnings history. In order to track their general financial health and for tax purposes, the employee must keep accurate records of their pay.
Conclusion
When you’re looking for a job, you should think about the company’s pay cycle. If possible, figure out how frequently you’ll be paid before starting work so you can evaluate how it will affect your budget. Consider how frequently you are paid at your current or previous work, and how it has influenced your budget in the past. Make a smart budget that works around your pay cycle so that you can continue to sustain or improve your lifestyle.
Biweekly Pay FAQs
Is it better to be paid weekly or biweekly?
Advantages of a biweekly payment schedule
Greater consistency: A biweekly payment plan ensures that your payments arrive on the same day like every other week. … More paychecks: Though you receive smaller paychecks each pay period than bimonthly payments, biweekly payments equate to more paydays and two “bonus” payments.
Is biweekly pay taxed more?
Tip. Whether you pay employees with weekly or biweekly paychecks, they’ll owe the same amount in taxes at the end of the year.
How do you calculate biweekly pay?
To figure out the gross biweekly pay for a salaried employee, divide their annual pay by 26; if they make $52,000, for instance, the gross pay is $2,000 every two weeks. Subtract withholding and deductions from that amount to get biweekly net pay.
- What is Biweekly Pay? Comparisons, Calculations, Pros & Cons
- Best online payday loans: Top 10 companies in 2023
- 401k: Easy Guide for Beginners and Pros(+Best 15 Plans in 2023)
- ONLINE LOANS: BEST OPTION TO LOOK OUT FOR (+ HOW TO APPLY GUIDE)
- What Is BUSINESS CYCLE?- Definition, Internal and External Causes
